Over the past several years an international network of networks known as the Internet has become increasingly popular. The Internet allows millions of users throughout the world to communicate with each other. To provide users with easier access to information available on the Internet, a World Wide Web has been established. The World Wide Web allows information to be organized, searched and presented on the Internet using hypertext. Thus, using the World Wide Web a user can submit a query for information and be linked electronically to information of interest which has been stored at Web locations on the Internet. Using hypertext, a user can also communicate information to other users of the Internet. Because of the use of hypertext, the information which can be queried and retrieved via the Internet includes not only textual information but also information in graphic, audio and video form. Web search engines and browsers have been developed to make searching and retrieval of information of interest on the Web a simple task. Hence, the Web has made it relatively easy for virtually anyone having access to a personal computer or other device connected to the Internet to communicate with others who are also connected to the network. This ease of use has resulted in an increase in the number of users utilizing the Internet.
With the proliferation of Internet users, numerous services are now provided over the Internet. One of the first such services to be offered was electronic banking. Electronic banking allows banking customers to access their account information and execute banking transactions, e.g. the transfer of funds from a savings to a checking account, by simply linking to a bank server using the Internet to access account information and communicate transfer instructions.
Electronic banking has advanced from this basic consumer-to-bank communication to a consumer being able to electronically pay bills and make other payment types and fund transfers to others by communicating instructions, via the Internet, to a service provider possibly distinct from the financial institute maintaining deposited or credited funds of a pre-registered payer. The payments are then made to the payee by the service provider. The term “payment” as used herein can include payment of bills as well as other payments not based upon bills. Funds from the payer's deposit or credit account, i.e. the payer's payment account, are debited by the service provider to cover the payment. The payment by the service provider to the payee can be made in any number of ways.
For example, the service provider may electronically transfer funds from the payer's banking account to the payee's banking account, may electronically transfer funds from a service provider's banking account, to the payee's banking account, may prepare a paper draft or check on the service provider's banking account and mail it to the payee, may prepare an electronically printed paper draft on the payer's banking account and mail it to the payee, or may make a wire transfer from either the service provider's banking account or the payer's banking account.
If the funds transferred to the payee are drawn from the service provider's banking account, funds from the payer's banking account are electronically or otherwise transferred to the service provider's banking account to cover the payment. Further, if the payment will be made from funds in the service provider's banking account, the payment will preferably be consolidated with payments being made to the same payee on behalf of other payers.
Accordingly, such electronic payment systems eliminate the need for a payer to write or print paper checks and then forward them by mail to the payee. This makes it easier and more efficient for the payer to make payments. Payees receiving consolidated payments no longer have to deal with checks from each payee and therefore can process payments more efficiently. The making of payments by the electronic or wire transfer of funds provides even further efficiencies in payment processing by payees, and it is well recognized that making payments electronically can significantly reduce the cost of processing payments for both the payer and the payee.
A payer must be a registered user of conventional electronic payment systems. Registration is required so that the service provider can obtain and validate information relating the user. Registration may be a somewhat simplified process whereby a user submits, on-line, information identifying his or her bank account and financial institution and his or her name, address and phone number, or some variation thereof. Other systems require that the potential user supply a voided check from the user's checking account. However, even with the simplified on-line registration process, the payer is not able to immediately direct payments. The user must wait for the service provider to validate the registration information and to receive a confirmation that the registration process is complete. This confirmation is typically sent from the service provider to the registering user via regular mail channels. Due to the processing and delivery time, the registering user is not able to immediately direct bill payment.
Accordingly, a need exists for a payment technique whereby a user may register and direct payments in a single on-line session.
In conventional electronic payment systems payment requests are processed before payment is released to reduce potential financial risk to the service provider. U.S. Pat. No. 5,383,113, to Kight et al., and assigned to the assignee of the present application, is directed to an electronic bill payment system and method. Processing a bill payment request, as disclosed in Kight, can include a risk analysis of the payment request before the payment is executed. This risk analysis can include determining in what form to release payment to the payee. Possible forms of payment are check, draft, or electronic funds transfer. The form of payment is based upon such criteria as analyzing the payment request to determine if the amount of the payment request meets or exceeds a first predetermined amount and determining if the total amount of previous payment requests within a certain timeframe meets or exceeds a second predetermined amount. The first and second predetermined amounts can be different amounts. The risk analysis can also include sending an inquiry to, and receiving a response from, a financial institution to determine availability of funds in the payer's account. The Kight patent utilizes both paper and electronic fund transfer. The risk processing in the Kight patent rests at least in part upon a decision between moving funds electronically or via less efficient paper means.
Accordingly, a need exists for a technique in which a payment request is timely and efficiently processed and executed, yet the service provider is protected from financial risk.
Merchants have begun to exploit the Internet's capabilities in their marketing of goods and services, i.e. products. Numerous merchants have now established virtual storefronts using a hypertext document, commonly referred to as a Web homepage, which users can access over the Internet. The merchant's homepage will typically provide information regarding products, and will often provide the prospective customer with the option to purchase a desired product by making the necessary selections and providing the necessary information to the merchant via the Internet. Hence, the Web offers a new and exciting channel for marketing goods and services, providing merchants with direct access to millions of potential buyers throughout the world in a manner which has never before been possible.
In order to ensure payment for products and services ordered over the Internet, merchants have typically offered the purchaser the ability to pay using credit or debit cards. Such cards are now widely used throughout the world to make purchases without cash. Credit cards basically extend a payment credit to the credit card holder. Debit cards, on the other hand, basically provide a means for debiting the cardholder's deposit account funds held by an issuing financial institute. As in traditional brick-and-mortar businesses, Web-based businesses typically pay a premium to financial institutions to be able to offer payment via credit and/or debit cards.
Also, individual sellers and purchasers have been brought together via the Internet. Sellers advertise goods for sale in a variety of sites on the Internet, and otherwise. These include personal homepages and public electronic bulletin boards. These individual sellers usually do not have the resources to accept payment via credit or debit cards. As discussed above, there is a cost associated with these transactions which makes it economically unfeasible for individuals to accept payment via these methods. Furthermore, these sellers usually do not have the technical expertise to maintain a homepage capable of accepting credit or debit card payments. As such, an individual purchaser typically pays an individual seller by check or money order. When payment is by check or money order, the seller must divulge to the purchaser his or her address. For payments by money order, the purchaser must purchase a money order and mail the money order to the seller. Thus, the period between the agreement to purchase and the receipt of the funds associated with the sale is dependent upon the time it takes to obtain a money order and deliver it to the seller. For payments made by check, in addition to the delivery time, the purchaser must reveals his or her personal information contained on the body of the check to the seller. Also, the seller is not assured that the check will be honored by the financial institution upon which it is drawn.
The latest development in bringing buyers and sellers together over the Internet are Web sites designed as auctions. Auctions are the newest, most convenient way to buy and sell things over the Internet. The auctions are typically hosted by Web sites which exclusively offer auctions or Internet portal sites which offer an array of services, though other types of Web sites also offer auctions. These sites offering Internet auctions will collectively be referred to as Auction Service Providers. These Auction Service Providers have created an on-line arena where users can register and become buyers or sellers in the auction. On-line auctions work similarly to standard auctions where the sellers have a particular item they would like to sell to the highest bidder. Typically an auction time frame is established that may span a few days to a few weeks to allow buyers an opportunity to place a bid. Bidding typically accelerates toward the end of the auction or bidding period. If a seller offers an item for auction and a bid is made, the seller is typically obligated to complete the transaction. Buyers may not retract a bid once it has been placed. The Auction Service Providers are creating a forum for this type of trading, but are not typically involved in the transaction between the buyer and seller.
Once bidding is over, the buyer is obligated to contact the seller within a designated number of days from the close of the auction, to discuss how to handle the shipping and payment for the merchandise. Buyers and sellers are both asked to register and to accept agreements to comply with the standard guidelines provided by the Auction Service Provider.
Registration information is required for both the buyers and sellers of the auctions. The registrations ensure that both parties have provided the necessary information to allow contact with each other when it is time to conduct a transaction. Contact information usually contains a name and a mailing address.
Some providers require each participant to reply to a confirmation e-mail in order to verify the information and that they have supplied a valid e-mail address. A user identification may also be used to allow the service provider to keep individual e-mail addresses private. In some cases a notification e-mail is sent to both buyer and seller to supply each with the other's e-mail address. Typically, contact should be made between both parties within 2 or 3 business days. Guidelines vary, but usually if the seller is able to contact the buyer within an agreed upon timeframe, that seller may then conduct his transaction with the next highest bidder.
Usually, the winning buyer at the auction site receives an e-mail from the service provider telling him that he has placed the winning bid and that he needs to contact the seller to finish the transaction. Or, this notification may be made via conventional postal delivery. Once contact has been made between the buyer and the seller, each must agree upon the terms of the transaction. They may agree that the buyer makes payment first, and then the seller may ship the item once payment has cleared. The seller may also agree to ship the item COD to the buyer. The Auction Service Provider is not usually involved in these directions, as they have merely provided an environment that facilitates the buying and selling of merchandise.
There are usually some standard payment methods suggested by the Auction Service Provider to the buyers and sellers. Typical payment methods are credit cards, money orders and checks drawn on buyers' accounts. If the parties to the transaction agree on a credit card or debit card payment, the service provider may act as a processing intermediary for the transaction.
Many individuals, whether purchasing goods and services from merchants or individuals via the Internet, or from an Internet auction site, do not wish to use debit or credit cards, or send banking account numbers over the Internet due to security concerns. This is because the Internet is an open communication network with virtually no built-in security.
Various techniques have been proposed for overcoming the reluctance on the part of potential purchasers to transmit their card numbers or account numbers over the Internet. Many of the proposed techniques rely on cryptography. Using these techniques, credit and debit card numbers are encrypted prior to transmission over the Internet to the seller and decrypted prior to storage at the merchant's Web site. These techniques may well alleviate concerns regarding the vulnerability of sensitive account information during transmission over the Internet. However, there remains a concern that, because the decrypted credit or debit card account numbers are stored on merchant computers, e.g. Web servers, connected to the Internet, this information will continue to be susceptible to attach by hackers and others who may attempt to gain unauthorized access to the information from virtually anywhere in the world. Although firewalls and other security measures can be taken to protect the stored information from unauthorized intruders, many merchants have neither the resources nor the expertise to implement such measures. Hence, encrypted transmission alone does not eliminate the security concern of many cardholders.
Others have proposed establishing what might be termed “virtual cash” which can be transferred from a purchaser's computer to a seller's computer to pay for a product or service bought via the Internet. The seller can then go to the “virtual cash” sponsor and exchange the “virtual cash” for actual cash. However, these techniques require the establishment of a new electronic monetary system and are reliant upon the financial worthiness of the “virtual cash” sponsor.
Still other proposed techniques utilize a type of “virtual cash,” which is associated with a purchaser's banking account at a financial institute. Using such a system the buyer transfers the “virtual cash” along with its banking account number to the merchant as payment for the purchased products. The merchant then transfers the “virtual cash” to the financial institute, at which the purchaser maintains the deposit account. The financial institute then debits the purchaser's banking account by the amount represented by the “virtual cash” transferred to the seller and pays the seller using the funds withdrawn from the purchaser's banking account. These latter techniques have many of the same problems associated with the use of credit and debit cards. That is, the banking account number must be transmitted over the Internet and stored at the seller's Web site, and accordingly may be susceptible to unauthorized access.
Potential purchasers of goods and services over the Internet have also raised concerns regarding the transfer of credit card, debit card and deposit account numbers, as well as the transfer of “virtual cash” payments to merchants/sellers which have little history or trade presence. In this regard, potential purchasers may have a valid concern a Web merchant/seller is nothing more than a front for fraudulently obtaining credit card account numbers, debit card account numbers, deposit account numbers and/or virtual cash from unsuspecting purchasers.
Techniques have additionally been proposed to provide a separate private network for transmission of sensitive account related information. These techniques do provide an extra measure of security, but are disadvantageous in that an auxiliary communication network is required and the potential purchaser is forced to first divert his or her attention from the merchant's/seller's Web site, connect with a separate network, and to then go back to the merchant's/seller's Web site to conclude the transaction.
As discussed, many consumers are unwilling to use debit or credit cards, or transmit their banking account numbers, over the Internet, especially to unknown merchants/sellers. In the context of an individual seller, some buyers do not feel comfortable divulging personal information such as banking account numbers to strangers. Furthermore, some consumers do not have access to debit or credit cards, but do have banking accounts. As such, whether unwilling to use debit or credit cards via the Internet, or unable to use debit or credit cards, these consumers have not had the means to make purchases via the Internet.
Accordingly, a need exists for a technique to purchase goods and services via the Internet with funds from a purchaser's banking account without divulging personal information relating to purchasers and sellers via a network.
In transactions between individuals and brick-and-mortar stores there are well known procedures for a customer to return unacceptable merchandise. Also, the goods or services offered by the brick-and-mortar stores are typically immediately available to the purchaser. For Internet based transactions, the seller must ship goods to the purchaser, or perform services for the purchaser at a later time than execution of the transaction. Some Internet based business have procedures in place for return of unacceptable goods, but the purchaser must rely in good faith that the unacceptable goods will be accepted back by the business. However, in Internet transactions between individuals, no such procedures exist. Thus, purchasers have to rely on the good faith of sellers that the goods or services are as represented. Additionally, purchasers have to rely in good faith that sellers will deliver the purchased goods and/or services. Likewise, sellers must rely upon good faith that sellers will make prompt payment, and that that payment will be “good.” This applies to transactions between individuals in both on-line auction and non-auction transactions.
A proposed solution to this dual problem exists. There are middlemen with a presence on the Internet who will accept both the sale payment from the purchaser and the goods from the seller. These middlemen verify the exchange. That is, they verify that goods are actually provided by the seller, and that funds are actually obtained from the purchaser, and then release the goods to the purchaser and the funds to the seller. However, oftentimes these middlemen are not in a position to judge the quality of the merchandise. For example, the merchandise may be a rare collectible with which a middleman may be unfamiliar. Also, this proposed solution adds extra shipping costs to the transaction. Instead of the goods being shipped from the seller to the purchaser, the goods must first be shipped from the seller to a middleman, and then from a middleman to the purchaser.
Accordingly, a need exists for an efficient technique which ensures that a purchaser receives what he bargained for, including a guaranteed return if the goods are not acceptable, and that the seller will be paid for delivered goods and services.
Another difficulty with Internet based purchases is that the purchaser has no way to know if the seller has actually shipped the goods, or performed the services. The purchaser who has paid for a product must wait for delivery of the goods, or performance of the services.
Accordingly, a need exists for a technique whereby a purchaser can be informed of the delivery or performance status of the purchase.
Yet another service now provided over the Internet is the delivery of electronic greeting cards via e-mail. Many Web sites offer such services. Electronic greeting cards are available for a myriad of occasions, as are paper greeting cards. However, electronic greeting cards have at least one disadvantage compared traditional paper greeting cards. Many senders include monetary gifts along with paper greeting cards. These gifts are typically in the form of cash, check, or gift certificate. With present electronic greeting cards, there is no way to include such a monetary gift.
Accordingly, a need exists for a technique for a donor to send a monetary gift payment via e-mail to a recipient.